Re Hall, Ian Robert Ex Parte Hall, Ian Robert v National Mutual Life Nominees Ltd Re Loiterton, John Barrie Ex Parte Loiterton, John Barrie v National Mutual Life Nominees Ltd
[1997] FCA 61
•5 Feb 1997
BANKRUPTCY ACT
IN THE FEDERAL COURT OF AUSTRALIA )
EXERCISING FEDERAL JURISDICTION )
IN BANKRUPTCY ) No NN 3552 of 1996
GENERAL DIVISION )
Re:IAN ROBERT HALL
Debtor
Ex parte:IAN ROBERT HALL
The Debtor (Applicant)
NATIONAL MUTUAL LIFE NOMINEES LIMITED
Respondent/Creditor
No NN 3553 of 1996
Re:JOHN BARRIE LOITERTON
Debtor
Ex parte:JOHN BARRIE LOITERTON
The Debtor (Applicant)
NATIONAL MUTUAL LIFE NOMINEES LIMITED
Respondent/Creditor
CORAM:Lindgren J
PLACE:Sydney
DATE:5 February 1997
REASONS FOR JUDGMENT
(ex tempore)
There are before the Court two motions, one in proceeding NN 3552 of 1996 in which Ian Robert Hall is the debtor, and the other in proceeding NN 3553 of 1996 in which John Barrie Loiterton is the debtor. In each case the creditor is National Mutual Life Nominees Limited ("National Mutual"). I will refer only to proceeding number NN 3552 of 1996 because I am assured that the circumstances and the affidavits in both matters are identical. Accordingly, the following reasons are
my reasons for decision on the motion in each matter.
By the motion the Debtor ("the Debtor" refers to each of Ian Robert Hall and John Barrie Loiterton in the respective matters) seeks an order setting aside a notice to produce served by National Mutual. The notice of motion was filed on 22 January 1997 and the notice to produce is dated 7 January 1997. The nature of the notice to produce and the relevant circumstances will be understood better if I first outline briefly the background.
On 26 November 1996, in proceeding S 4224 of 1994 in the Equity Division of the Supreme Court of New South Wales, Bryson J gave judgment for National Mutual against the Debtor for $602,584.23. I need not discuss the circumstances leading up to the giving of that judgment.
On 26 November 1996, National Mutual caused a bankruptcy notice in the sum of $602,584.23 to be issued against the Debtor. It allowed 14 days after service for compliance.
The Debtor applied in the Supreme Court proceeding for a stay of execution pending an appeal. That application was heard by Bryson J on 6 December 1996. At that time no notice of appeal had been filed, but the bankruptcy notice had been served and the time for compliance with it was due to expire on 12 December. On the application for the stay, the Debtor (with others) offered to pay $300,000 into Court within 14 days, but security was not proffered for the amount of the judgment and
was not proffered if an interval were to be allowed to raise the balance in excess of $300,000. Apparently, during the course of the hearing, the terms of the Debtor's "offer" became one of the payment of $300,000 into Court within 14 days and of payment of the balance within three months.
His Honour said that he would grant a stay if, in addition to the sum of $300,000, a further amount of $350,000 were secured. The reason for the increase in the aggregate amount was to provide a "cushion for costs". However, the additional security was not offered. What his Honour did, in the event, was to allow a short further period, namely until 11 December 1996, in which the further security might be found. More precisely, his Honour dismissed the Debtor's application with costs but stayed that dismissal until 11 December 1996, granting leave to the Debtor to apply in the meanwhile for further consideration on one day's notice, provided that such further consideration occurred on or before 11 December 1996.
The Debtor's notice of appeal was filed on 9 December 1996, number CA 40755 of 1996. The Debtor filed the application which commenced the present proceeding in this Court on 10 December 1996, seeking an extension of time for compliance with the bankruptcy notice. The time sought was until the hearing and determination of the Debtor's appeal. The application was returnable on 3 February 1997. In the meanwhile, the time for compliance with the bankruptcy notice had been extended by a Deputy Registrar on 10 December 1996 to 3 February 1997. The substantive application by the Debtor has been fixed for hearing on 25 February 1997, and the time for compliance with the bankruptcy notice has by now been further extended to that date.
On 3 February 1997 an amended application was filed in the present proceeding, seeking not only the extension of time for compliance with the bankruptcy notice, but also an order that the notice be set aside.
The notice to produce to which the present motion relates is dated 7 January 1997. It requires the Debtor to produce financial records divided into four categories. They all relate to the period 1 January 1996 to 31 December 1996. That period is called in the notice the "relevant period". National Mutual says that it is entitled to have access to documents relating to the financial position of the Debtor because those documents are relevant to the issue of whether the Debtor could have obtained a stay of execution of the judgment before Bryson J. It is common ground, and must be, that the reason for the failure to obtain a stay of execution is a matter relevant to the application for the extension of time fixed in the bankruptcy notice. Accordingly, Bryson J's reason for refusing the stay of execution assumes significance in the present proceeding in this Court.
Paragraph 11 of the affidavit of Ian Robert Hall sworn 10 December 1996 in the present proceeding reads as follows:
"11.I say that I am not at this time in a position to improve on the security and terms offered to the court [the Supreme Court of New South Wales] in support of my application for a stay of execution on the judgment."
National Mutual wants to test that paragraph. Although it does not have evidence at present, or at least it has not led any evidence before me, suggesting that the Debtor could, in fact, have provided the additional security to which Bryson J referred, or that the Debtor had disposed of assets, National Mutual says that it is entitled to have access to the records referred to in its notice to produce with a view to making out that case. The Debtor, on the other hand, points out that so far as the evidence reveals, there is no suggestion that he was not expressing the true position in para 11 of his affidavit and before Bryson J, or that he has in fact disposed of assets. In effect, the Debtor says that National Mutual is not entitled to "fish" for evidence to make out the kind of case to which I referred.
I think that generally the submission of National Mutual should be accepted. This is a case in which the Debtor has not obtained a stay of execution although he has applied for one. His case clearly is, and will be on 25 February 1997 that the reason is that it was impossible for him to provide the additional security referred to by Bryson J. Whether he was or was not able to do so will be an issue relevant to the exercise of discretion on 25 February 1997. In my view, the Debtor is not entitled to take the position that while the real reason for a refusal of the stay of execution by Bryson J will be an issue on the hearing of his application to this Court, nonetheless National Mutual is not entitled to see his documents relevant to that issue. Therefore, in substance, I will dismiss the Debtor's application to set aside the notice to produce.
The Debtor has also attacked the width of paras 3 and 4 of the notice which are as follows:
"3.All documents evidencing any disposition or acquisition of any interest in property by the applicant during the relevant period.
All documents evidencing the receipt of income by the applicant during the relevant period."
I agree with counsel for the Debtor that para 3 refers, in substance, to "any disposition or acquisition of any property by the applicant during the relevant period". It may be that that kind of expression is commonly used in documents of this nature, and it may be that the word "property" is commonly viewed in such a context as not encompassing certain minor and insignificant forms of property. But the submission is correct that literally it includes such things as the giving of Christmas and birthday presents, the buying of a meal for another, and transfers of goods of a trifling nature for full consideration. As counsel for the Debtor says, it may be that para 3 can easily be cured. I think that the notice should be set aside in so far as it includes para 3 on the ground that
it is oppressively wide.
I do not think that the same can be said in relation to para 4. It is true, as was submitted, that in order to comply with the notice, the Debtor would need to have an understanding of the word "income", but I do not see this as presenting a difficulty. I will not set aside para 4.
In the result, subject to the minor respect mentioned in relation to para 3, the motion to set aside the notice to produce should be dismissed with costs.
The orders of the Court are as follows:
Set aside paragraph 3 of notice to produce dated 7 January 1997;
Otherwise, dismiss the motion to set aside the notice to produce, brought by notice of motion filed on 22 January 1997;
Order the Debtor to pay the Creditor's costs of the motion to set aside;
Stand over the notice to produce to Wednesday, 12 February 1997 at 9.15 am before the Registrar.
I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.
Associate:
Dated:13 February 1997
Heard: 5 February 1997
Place: Sydney
Decision: 5 February 1997
Appearances: Mr J Bartos of counsel instructed by Middletons Moore & Bevins, appeared for the Creditor (respondent to the motion).
Mr R Gye of counsel instructed by Phillip Anthony Biber, appeared for the Debtor (applicant on the motion).
0
0
0